House prices drove household wealth 1.2% higher in March quarter
Total household wealth increased 1.2 per cent ($173b) in the March quarter 2022, reaching a record $14.9 trillion, while wealth per capita rose to a record high of $574,807, according to figures released today by the Australian Bureau of Statistics (ABS).
Residential property assets continued to drive increases in household wealth, contributing 1.4 percentage points to growth.
Katherine Keenan, head of finance and wealth at the ABS, said: “While the pace of property price growth started to moderate, with falls in Sydney and Melbourne this quarter, other capital cities and regional areas rose, resulting in an overall rise in house prices of 1.9 per cent nationally.”
Since March quarter 2020, household wealth has increased 35.3 per cent. This was driven by asset prices appreciating, which resulted in wealth per capita increasing by $146,008. Households have accumulated $305b in currency and deposits since the start of the pandemic.
Residential property accounted for most of the growth in household wealth since the start of the pandemic, rising 39.9 per cent. Superannuation balances increased 22.5 per cent as share markets were supported by accommodative monetary policy.
Currency and deposits contributed 0.2 percentage points to growth in the March quarter, while superannuation balances and household loans both detracted 0.3 percentage points. Superannuation balances declined 1.3 per cent this quarter as heightened uncertainty in global share markets weighed on the value of overseas assets held through superannuation funds.
Demand for Credit
The record total demand for credit of $218.8b was driven by private non-financial corporations ($153.2b), while households and government borrowed $41.9b and $17.5b respectively. Demand for credit by private non-financial corporation was driven by equity raising and was dominated by a large corporate restructure which resulted in investor funds repatriated to the Australian stock market.
“Despite corporate restructuring activity, business equity expanded as foreign owned resource companies reinvested their retained profits earned on exports. Business borrowing was the strongest seen in the last two years,” Ms Keenan said.
The deposit assets of banks with the Reserve Bank of Australia (RBA) reached an unprecedented level of $439.3b as the RBA concluded its Bond Purchasing Program in early February, marking the end of extraordinary monetary policy measures introduced to support the economy during the pandemic. Holding losses on Commonwealth and semi-government bonds held by the RBA were $21.5b this quarter as bond yields increased in line with a steepening trajectory of long-term interest rates.
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